GC Sanity - I am I being fleeced or is this just the Business

[William Tharp]

Good morning BP, I am a long time but and hold investor but a Newbie to new, multi unit construction on the west coast of Florida. I am building out a multi unit building with a cost, including labor and materials of 1.1 million. Because the deal is awesome, I am seeking to close on it even though it is quite a ways from my home. To handle the project I asked for fixed priced quotes from GC's in the area. One of the responses was: Labor and materials 1.1 million Onsite Project supervisor 90k GC profit and oversight costs 260k In my opinion, the combined costs of the 90k plus 260k seems high. Can experienced investors in new construction projects in the Florida west coast area provide me some feedback on whether these costs are responsible? Many Thanks, William William

[Jay Hinrichs]

its market driven... we are in a funny cycle right now... many GC's got wiped out in 08 to 2011  went BK ect... so instead of them doing these projects for their own account they are forced to work for others..   So on one hand your getting very experienced GC with no ability to borrow yet.. still feeling the sting of going BK.

So to that end we hire GC by the unit on new construction... and pay 10 to 15k per door.  They pay their own insurance etc..

I would say your bids your getting are on the high side.. and I don't see high end finish's or at least just granite stainless and some crown having an affect on what a GC would charge.. those are standard finish's these days in most markets.  ( crown not so much) but granite quartz stainless yes.. and appliances are appliances nothing more expensive about installing those in most instances.

Right now in most markets SUB labor is a real issue  IE lack of quality subs.. too much demand for new construction and not enough folks to do it.. so this has cost sub prices to rise over the last 3 years.

I would get some other bids to see what the market is paying.. although in our market that would be very high...

in context we will pay about 300k for 4.6 mil of construction cost.. ( vertical only does not include the building of the lots which is another 1 mil and its included in the 300k)